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Decentralization of Public Healthcare Services in the Province

of Sumatra Utara, Indonesia

Februati Trimurni
Organization and Management, University of Sumatera Utara, Jl. Almamater Kampus USU,
Medan 20155, Indonesia

*
Email: feb_tambunan@yahoo.com

Abstract. The study examines the effectiveness of decentralization program on healthcare


sector in the provincial level. The decentralization program is analyzed through the
implementation of both political decentralization or devolution as well as the administrative
decentralization or deconcentration. The study adopts qualitative approach in which the
technique of in-depth interview, observation and documentations. Informants of the study are
vary including those who works with the provincial and district/municipal city offices of the
healthcare sector, community, practitioners and other relevant stakeholders. The study found
the implementation of decentralization in the province of Sumatra Utara does not work that
optimal with some reasons. The first one is the fact, the devolution and the deconcentration
programs are not conducted simultaneously, mutually support and complimentary. The second
one is the lack of capabilities of the local apparatus to understand the principles as well as to
carry out those programs in the field. The last one is the limitation on financial support to
conduct the decentralization program. The study furthermore recommends the needs to
synergize the devoluted programs and the deconcentrated programs in the field, the
enhancement of local capacities to carry out the healthcare sector as well as the need to reform
and improve local fiscal sectors.

1. Introduction
At present, many countries in the world practice decentralized systems, including Indonesia. The
decentralization system that prevailed in Indonesia began in the "reformation" era, particularly since
the issuance of Law Number No. 22/1999 concerning on Regional Government. This law has been
effective since 2001.
The implementation of decentralization in Indonesia is quite interesting to study because the
country has implemented an absolute centralization system for about thirty two years. According to
the World Bank the implementation of the regional government law has made Indonesia to be one of
the countries that practice "big bang decentralization" [1]. Although this law has been finally revised
twice (Law No. 32/2004 and the latest revision becomes Law No. 23/2014) so that the authority
submitted or distributed to the regions is not as big as the authority in initial law or Law No.22/1999.
The main discussion of this research is about decentralization both in the term of politics
(devolution) and administrative (deconcentration) in healthcare services seen from the planning and
implementation of healthcare programs. Political authority is owned by the Regional Healthcare
Office (Dinkes Daerah) and Community Healthcare Center (Puskesmas). Meanwhile, administrative
authority is owned by the governor as the representative of the central government in the region. In the
healthcare sector, the governor gave this authority to the Dinkes of Sumatra Utara Province (Dinkes
Provinsi). At the central level, the healthcare sector is the responsibility of the Ministry of Health.
Research on decentralization has been carried out in recent years. Hartanti's research [2] for
example focuses on administrative authority in the financial management of the education sector. The
result of her research is the reduction in the amount of administrative authority did not reduce the
allocation of funds that were de-concentrated to the regions. Deconcentration funds have also not been
appropriately allocated. Alfiyanti's research [3] is also related to administrative decentralization which
examines the accountability of the expenditures of deconcentration budgets. The realization of the
deconcentration budget has reached 91 percent, but it is not followed by evidence of accountability.
Deconcentration activities furthermore can be concluded that do not transparent yet. Meanwhile,
Kobandaha [4] analysed the use of administrative authority possessed by the governor with regard to
overseeing the preparation of regional regulations on regional budget. The result of his research is the
need for a strict arrangement of the principles of deconcentration. This is important so there is no
misuse of the governor’s authority against the regent/mayor in the formulation of regional regulations.
Although some of these studies analyse administrative decentralization, all three differ in scope with
the research being carried out. In addition, the three studies did not discuss the political authority
which was also the objek of this study.
Research on political decentralization in healthcare services has been for intance carried out by the
SMERU [5]). The study found that the biggest challenge of implementing political decentralization
was the unavailability of supporting regulations and directions. The GDS II study [6] also concerns on
political authority in health services, but is related to the availability of health facilities and public
access to these healthcare facilities. In addition, the GDS II study examines political decentralization
in implementing good governance. The implementation of good governance has not shown significant
improvement in the era of regional autonomy in twenty provinces in Indonesia. Whereas, the study of
Langran [7] saw political decentralization from democratic practices that finding a lack and unfairness
of the health budget and community participation that reflected the weakness of democracy.
Meanwhile, Sun's research [8] analysed the relationship between political decentralization and health
system performance. The result was giving greater decentralization authority to regions can improve
the quality of health system performance. In addition, abundant state resources have a major impact on
the effectiveness of decentralization.
In contrast to this study, GDS II research, Langran and Sun discussed the magnitude of political
authority. This study examines political authority in planning and implementing health programs.
Actually Sun also uses health programs to see the implementation of decentralization, but his research
uses quantitative research methods. Meanwhile, this study uses qualitative methods and health
programs as case studies.
The Zarmaili study [9] also used case studies, but the cases used were related to administrative
services in the healthcare and education sector. The results of his research, decentralization has not
been able to run effectively because community participation is still very low in the level of planning
and supervision of the development of healthcare and education services. Meanwhile, Rajesh and
Thomas [10] and Exworthy, Frosini and Jones [11] used an institution as a research case. Rajesh and
Thomas use the institution of Local Self Governments as a research case that can facilitate the
provision of health services to the community. Whereas Exworthy, Frosini and Jones used Foundation
Trusts institutions and found a model consisting of three elements, namely the right to make decisions,
residual ownership status and market exposure. These elements must be owned by the Public Hospital.
The merging of these three elements produces incentives that encourage the development of
entrepreneurial behaviour.
Apreku's research [12] looked at the administrative, political and fiscal authorities carried out in the
healthcare and education sector. The results of his research, the education sector has a scope of
regional autonomy that is greater than the healthcare sector in terms of finance, service organizations,
human resources and governance. In addition, his research findings are insufficient evidence regarding
the impact of decentralization on the performance of the healthcare and education sector, especially
seen from the output indicators and outcomes. Furthermore, Kiriaghe's research [13] discussed
administrative and political authority together from a political perspective. Local governments have
autonomy, but there is little autonomy in utilizing financial resources because financial problems are
still controlled by the central government. Therefore, participation in policy planning is still very
limited. The level of decentralization is not in the sense of devolution.
The approach used in this research is multi-level stages that use vertical relations, namely between
different levels of government from the point of view of public administration (institutions).
Therefore, the role of each government institution or organization in using its authority can be
analysed. In addition, this study also looked at horizontal relations at the sub-district level where the
Puskesmas were located. Sciortino's research [14] also uses a multi-level stage perspective but from
Anthropology.
The main theories applied in this study are Smith's decentralization theory [15], the
decentralization theory of Cheema and Rondinelli [16] and the theory of decentralization of Rondinelli
et al. [17]. These theories are chosen based on several main reasons. Smith's decentralization theory
examines decentralization more than a country's territorial hierarchy. This is in accordance with the
system of government in Indonesia which consists of central, provincial, district /municipal city and
sub-district. In addition, Smith's decentralization theory divides decentralization based on two forms:
devolution (political decentralization) and deconcentration (administrative decentralization). Both
forms of decentralization are common practices of decentralization and are the same understanding for
the majority of government employees in Indonesia. Meanwhile, the theory of decentralization of
Cheema and Rondinelli and the theory of decentralization of Rondinelli et al. regarding
decentralization were taken from various cases in developing countries or ex-colonial foreign
countries. Indonesia is one of the countries in that category. In addition, the decentralization theory of
Cheema and Rondinelli and Rondinelli et al. uses an economic perspective as the basis of their
theories so that it can complement Smith's decentralization theory which looks more at a political
perspective.
Smith's decentralization theory, Cheema and Rondinelli and Rondinelli et al. do not see
decentralization of politics and administration as two stand-alone concepts but there is a situation that
fills one another, supports and complements in providing public services. This study also wants to
analyze the implementation of political and administrative decentralization together by using health
programs as a case study.
Starting from the gap of past studies, methodology and main theories of decentralization, this
research is expected to be able to find new findings that are more specific, comprehensive and detailed
from the perspective of Public Administration. In addition, the results of this study can contribute,
especially with regard to organizational and management aspects which are part of the development of
a friendly city.

2. Method
The scopes of this study are the healthcare sector. The healthcare sector is one of the basic needs of the
community which is a mandatory regional affair. The main problem of this research is how the concept
of decentralization both politically and administratively is carried out in health services in the regions.
This investigation uses qualitative methods with adopting case study [18] and multi-level stages
approach [19]. Four districts and cities, namely Deli Serdang district, Serdang Bedagai district, Medan
municipal city and Binjai municipal city in the province of Sumatra Utara have been selected as
research locations using purposive sampling. Furthermore, each district and city is represented by two
Puskesmas which are selected using purposive sampling.
The primary data collection techniques in this study were conducted through in-depth interviews,
interviews, phone interviews, questionnaire and observation. Whereas secondary data collection
needed to support primary data is carried out through both published and unpublished documentation
techniques. The informants in this study are those who work with the provincial and district/municipal
city offices of the healthcare sector, communities, practitioners and other relevant stakeholders that are
determined using purposive and snow ball sampling techniques. This study then uses the triangulation
method to see the validity of the data [20].

3. Results and Discussions


3.1 Decentralization of the Healthcare Sector in Indonesia
The health sector is a concurrent government affair owned by the central, provincial and
district/municipal city governments. Concurrent government affairs handed over to regional
governments both provincial and district/municipal city are the basis for the implementation of
autonomy. But the focus of the implementation of political decentralization lies in the
district/municipal, the provincial government has only the remaining authority of the political
authority. Meanwhile, the implementation of administrative decentralization lies in the province.
District/municipal governments are only beneficiaries of the implementation of the administrative
decentralization.
Political decentralization in the healthcare sector is principally meaningful in the delivery of health
matters from the central government (Ministry of Health) to regional governments (Dinkes Daerah).
In this case the focus is on the district (Dinkes Kabupaten/Kota). Therefore, the Dinkes
Kabupaten/Kota is the highest institution that takes care of the healthcare sector at the regional level.
Furthermore, the Puskesmas acts as the technical implementation unit of the District (Dinkes
Kabupaten/Kota) to carry out part of the operational and supporting technical activities in the working
area.
In administrative decentralization, political authority remained with the central government, while
administrative authority was with the governor as the representative of the central government at the
regional level. This can shorten the bureaucratic chain from implementing the duties and functions of
the central government.
In the healthcare sector, the central government through the ministry of health provides a
healthcare menu (main health program) and a number of funds for implementing the healthcare menu.
Furthermore, the Dinkes Provinsi as the governor's executor outlines the health menu into healthcare
programs and sub-programs which are then carried out in the district (Dinkes Kabupaten and Kota),
Puskesmas and the community. Thus, all activities from the planning of healthcare programs and sub-
programs are no longer implemented in the ministry of health, but in the capital city of Sumatra Utara
or in the districy/municipal city area.

3.2 Decentralization and the Challenge of Healthcare Services in SumatraUtara Province


The implementation of political decentralization and decentralization of administration in Sumatra
Utara is basically in line with the theories of decentralization as described above. Both of these
concepts are in one continuum line, which means the implementation is carried out simultaneously and
sometimes complementary. In the domain of decentralization of politics, regions, regional health
offices and health centers have genuine authorities in the fields of planning, budgeting, regulation and
implementation of the health sector. Meanwhile, in the domain of administrative decentralization,
these institutions are given the task of carrying out programs planned, budgeted and regulated by
higher government, in this case the central and provincial governments.
Decentralization of administration is an important part or another component of implementing
devolution or decentralization broadly. Administrative decentralization in this context does not stand
alone in a dichotomy within the same locus of authority and administration, but rather two concepts
that must co-exist and synergize with each other.
Deconcentration can function if devolution has been carried out properly which means that
devolution as genuine authorities from the local government has run perfectly. If not, the focus of
deconcentration holders will be disrupted or cause problems. Furthermore, devolution can be carried
out well in autonomous regions in the provincial government if supervision and monitoring through
deconcentration authority of deconcentration holders is carried out.
Political decentralization provides autonomy to the districts /municipal cities in this study to four
districts (Dinkes Kabupaten/Kota) and 8 Puskesmas in Sumatra Utara. The implementation of political
decentralization can be explained through the planning and implementation of health programs which
are used as cases in this study. Basically, health programs implemented in Puskesmas are funded by
Health Operational Assistance (BOK) funds originating from the National Revenue and Expenditure
Budget (APBN). The BOK is provided by the central government to local governments to help local
governments achieve national targets in the health sector which are the responsibility of autonomous
regions. Funding assistance from the central government is proof that the autonomous region has not
been able to finance the health sector itself. However, from the results of research, the implementation
of political decentralization in the health sector has not gone as expected.
Based on the findings above, the implementation of administrative decentralization in the
healthcare sector in Sumatra Utara has become very important. This is due to the large number of
deconcentration programs obtained by the autonomous region, especially related to capacity building
programs for increasing technical and soft skills in the health sector in the health sector. In other
words, administrative decentralization activities should be a bridge to realize autonomous regions that
are able to create their own programs and finance them independently.
However, administrative decentralization activities in the health sector in Sumatra Utara have not
reached a maximum level in providing assistance to political decentralization activities. Some health
sector deconcentration programs are not in accordance with the human resource needs in the region.
Deconcentration funds are also limited so that the training, guidance or outreach provided by the
Dinkes Province to healthcare or non-healthcare human resources and communities in the regions has
not provided optimal benefits. Some training materials and guidance only contain general matters, so
that they do not significantly add insight or the ability of human resources in the area.
This problem can actually be overcome by combining healthcare programs derived from
deconcentration funds and funds originating from the Regional Budget (APBD) of Sumatra Utara
Province. Combining or synergizing these health programs can be done because several central
government programs are also programs of the Government of Sumatra Utara Province. But it requires
high employee creativity and integrity so that these programs can work together with one another.
There are differences in the planning of health programs in the "new order" era which adheres to a
centralized system. In the "new order" era all health programs came from the central government
while the regional government only implemented programs planned by the central government. At that
time the Governor, Regent and Mayor were elected by the President from the same political party as
the President so that there was no reason for them not to carry out the vision and mission of the
President who had appointed him. Meanwhile in the era of "reform" of the central government in this
case President Joko Widodo had his own vision and mission that must be achieved by all regional
governments both provincial and district/municipal city governments throughout Indonesia. In the
healthcare sector the President's vision and mission are further elaborated by the Ministry of Health to
become a healthcare menu. Different from the "new order" era, in the "reform" era Governors, Regents
and Mayors were elected by the people through direct elections, because it had its own vision and
mission. This vision and mission can be different because Governors, Regents and Mayors are from
different political parties than the President. However, from the research findings some central
government programs are the focus of local government as well.
In addition to quality healthcare programs, high human resource capabilities and skills are very
important in the era of decentralization. The amount of authority of the government in the region must
be followed by the ability and skills of its human resources to use the authority. This is because
decentralization requires regions to be independent and empowered so that they are able to carry out
their own regional affairs such as formulating healthcare policies at the regional level and planning
creative and innovative healthcare programs and activities in accordance with the needs of different
regions.
However, human resources at the Puskesmas have not been able to see healthcare problems
optimally. Creating creative and innovative human resources is not an easy matter considering that the
work culture in the government bureaucracy has not changed completely. Apart from that, there has
not been much visible support from the Dinkes Kabupaten and Kota, so that it is no wonder that the
health programs or activities made by the Puskesmas are still fixed as in previous years.
In addition to the low capacity and skills of the human resources in the healthcare sector in the
regions, the deployment of employees is also a challenge to the successful implementation of
decentralization. Puskesmas in city areas, for example, have medical personnel such as general
practitioners and dentists exceeding the needs, while Puskesmas in rural areas lack health workers.
One of the causes of this uneven distribution is due to the large role of outsiders in the placement and
transfer of health workers. Dinkes kabupaten/kota for example are helpless when individuals from the
executive, legislative and judicial institutions "ask for help" so that their relatives are transferred to
certain Puskesmas. Meanwhile, the district/munipal city agency implementers has not fully worked
based on work analysis and job descriptions. The decentralization policy authorizes the placement or
transfer of health and health center heads and health and non-health employees to the district/city
government.
Beside to the challenges above, the transfer of the head of the Puskesmas is also not based on
careful planning or does not have clear reasons so that it has an adverse impact on the overall
performance of the Puskesmas. One form of lack of planning is the replacement of the head of the
Puskesmas that is too fast. As is known, the role as head of the Puskesmas is not only related to
activities within the Puskesmas but also those outside the Puskesmas. This is because the services
provided by the Puskesmas require assistance from other institutions or sectors such as sub-districts,
kelurahan/villages and so on. Thus time is needed to adapt to all stakeholders from this Puskesmas.
In the context of political decentralization, basically APBD must be the main source of financing
for health services in the district/city. This logic will run smoothly for regions that have large regional
budgets and have sufficient income sources and not too high population densities.
The amount of the APBD will then be directly proportional to the amount of funds allocated to the
health service sector. However, the budget division per service sector including healthcare services
must still require political will from the regents/mayors of each region. Although healthcare sector
services are categorized as basic services, the government does not immediately follow up with strict
legal norms relating to the minimum percentage of the budget that must be allocated to the health
sector.
Data from the Ministry of Health in 2015, the total APBD in Sumatra Utara amounted to IDR 39.91
billion; the budget for the healthcare sector is IDR 3.75 billion or 9.41 percent of the total budget.
Based on the results of the Ministry of Health's performance in 2015 as many as 51.12 percent of the
district/municipal city governments allocated a budget for the healthcare sector below 10 percent of
the APBD (Table 1). Meanwhile healthcare programs or activities that must be carried out at the
Puskesmas are quite a lot. This causes some health programs not to reach the community.

Tabel 1 Percentage of Healthcare Budget in the 2014 Regional Budget

Amount of District/Municipal City and APBD Percentage on Healthare Sector


Percentage of Total District/Municipal
City in the Country
239 (48.98 percent) At least 10 percent
234 (48.05 percent) 5 percent – 9.99 percent
15 (3.07 percent) 1.44 percent – 4.99 percent
Source: Indonesian Ministry of Health, 2015

Compared to 2014, the amount of budget allocation in the healthcare sector in 2015 was almost the
same or there was no significant increase. One reason is the amount of budget allocation for salaries.
A total of 131 local governments in Indonesia spend half of the APBD on employee salaries
(excluding soldiers) [21].
Even this budget that is not too large in the end does not fully reach the community in the context
of building health services. According to Wildmalm [22] in developing countries the biggest
challenges in health and education development come from corrupt practices committed by officials,
politicians, teachers or health workers.
One reason that at least 10 percent of the total APBD has not been fulfilled for the healthcare sector
is due to the small amount of district/municipal city Regional Original Income (PAD). Of the four
districts/municipal cities that are the location of this study. Medan has the largest PAD in Sumatra
Utara (Table 2). The amount of PAD makes Medan one of the areas where Puskesmas employees
receive welfare benefits every month. In addition, in the decentralization era there was a significant
influence between the number of PAD and the number of programs implemented in the Puskesmas
and district/city healthcare offices.

Table 2 Total District/City Region Original Income in Sumatra Utara

District/Municipal Regional Original Income (in Million Rupiahs)


City 2013 2014 2015
Deli Serdang 465 566.7 630.1
Serdang Bedagai 53.8 61 72.4
Medan 1758.8 1515.7 1679.2
Binjai 46.1 68.7 88.7
Sumatra Utara 34867 3499 4089.5
Source: Central Bureau of Statistics, Sumatra Utara, 2013-2015

The majority of autonomous regions in Indonesia, including Sumatra Utara, are still dependent on
the regional budget (APBD) in financing healthcare programs. The APBD consists of revenues from
PAD, Revenue Sharing Funds (DBH), General Allocation Funds (DAU) and Special Allocation Funds
(DAK). Preferably, the financing of healthcare services and also the financing of development
programs that become regional liabilities come from PAD. However, the vast majority of regions in
Indonesia, including in Sumatra Utara still depend on DBH, DAU and DAK in financing healthcare
programs. This is due to the fact that the PAD in each autonomous region has not had a significant
amount. Meanwhile, the potential tax objects in the region such as Income Tax, Value Added Tax,
Export/Import Tax and so on are still the object of central government tax. Such a distribution system
has failed to achieve the goal of equity between rich and poor regions [23].
From the explanation above, the relationship between political authority and administrative
authority is very close and important, especially in countries that have autonomous regions that are not
yet fully independent due to the limited financial and human resource capacity in the region.
Administrative decentralization possessed by the governor as a representative of the central
government in the regions can be used to cover up the limitations that local governments have as
autonomous regions. In addition, the administrative authority can be used by the Governor to reduce
the gap between autonomous regions in a province which is his responsibility so that each autonomous
region can prosper its people as the main goal of implementing political decentralization.
However, administrative affairs carried out through deconcentration activities in the healthcare
sector in an orderly manner must be submitted to the autonomous region to be carried out
independently (Rondinelli et al.). Therefore, it needs a new formula for the gradual reduction of the
authority of the central government in the regions as an autonomous region. This is inseparable from
Ostwald, Tajima, & Samphantharak's opinion [24] that decentralization in Indonesia is a transitional
process to accommodate the demands of reform in 1998. So the implementation of decentralization is
not an effort to create an efficient government, but rather the method chosen to overcome critical with
fast that happened at that time. In addition to the new formula for the authority of the central
government in the regions, reform of the financial balance system between the central government and
local governments is also needed. Through this reform, the regional government finances are getting
bigger so they are better prepared to implement devolution policies.

4. Conclusions
The implementation of decentralization, both political decentralization (devolution) and administrative
decentralization (deconcentration), in the healthcare sector in Sumatra Utara cannot be said to have
been running optimally. There are three main factors which are the causes, which are related to health
programs, human resources and finance.
The relationship between political decentralization and administrative decentralization in the
healthcare sector in Sumatra Utara province is very important. Programs and financing for the
decentralization of health sector administration can help the implementation of political
decentralization programs in the health sector. The relationship between the two decentralizations type
is also explained to be always directly proportional in the sense of the word that the greater the
financing of administrative decentralization programs, the better the implementation of political
decentralization in the health sector. However, in the perspective of regional independence, the greater
the funding and administrative decentralization programs carried out by the central government, the
smaller the independence of the regions.
Recommendations of the study are placed at least on three fields which are (1) the necessary to
make the devoluted and the deconcentrated programs synergized on the ground, (2) the empowerment
and improvement of local capabilities to implement the healthcare sector as well as (3) the urgency to
reform and improve local fiscal system.

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